FHA Condo Changes: FHA is relaxing the guideline to approve (insure) loans to buyers. For many years developers would stray away because of the crazy (owner/renter) ratio in the building, which sucked!
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My friend Tom, almost went bankrupt after developing 8 townhomes, (that had 2 walls connected) declaring it legally a CONDO. Buyers loved the place but could not get a loan, just crazy. Now FHA is relaxing that old loco law.
FHA Condo Changes Effective Now
According to this site, The U.S. Department of Housing and Urban Development (HUD) reports that 84% of Federal Housing Administration (FHA)-insured condo buyers have never owned a home before. According to the National Association of REALTORS®, HUD’s new FHA condominium loan policies that went into effect October 15, 2019, will help alleviate affordability restraints impacting markets across the country and result in more Americans becoming homeowners.
Single Unit Approval
Under the new rule, FHA borrowers can obtain Single Unit Approval on non-FHA approved condominium properties that meet the following requirements:
- At least five units
- A limited concentration of FHA-insured units
- At least 50% owner-occupancy; and
- A maximum of 35% commercial space.
Condo Mortgage Insurance
According to the U.S. Department of Housing and Urban Development, Section 203 (b) of the National Housing Act provides authority to insure any mortgage covering a one-family unit in a project coupled with an undivided interest in the common areas and facilities which serve the project. FHA insures condominium loans for up to 30-year terms to purchase or refinance a unit in an FHA-approved condominium project or in a project that is not FHA-approved but meets the Single-Unit Approval requirements
